Market Meltdown: Nigerian Equities Bleed N2.8tn in Week of Trump-Induced Panic
The threat from former US President Donald Trump to launch a military invasion of Nigeria sent immediate and violent shockwaves through the nation’s financial markets, turning the first trading week of November into a devastating rout.
Investors, spooked by the geopolitical firestorm, frantically offloaded assets, sparking a sell-off that wiped a staggering N2.8 trillion from the Nigerian Exchange Limited (NGX) in just five sessions.
The downturn was relentless, with the market closing in the red every day from November 3rd to 7th. The panic was palpable on the first trading day after Trump’s weekend threat, as the NGX All-Share Index and Market Capitalization dropped sharply.
What began as a N244.9 billion loss on Monday snowballed into a full-blown crisis, with investors shedding a further N611.96 billion on Tuesday and a catastrophic N1.31 trillion on Wednesday.
The week concluded with continued bleeding, losing N347.75 billion on Thursday and N318.78 billion on Friday.
The bearish sentiment, driven by sell-offs in key banking, oil & gas, and consumer goods stocks, crushed the market’s year-to-date return, which fell to +49.37%.
This dramatic reversal of fortune underscored a renewed wave of investor caution, directly threatening to erase the recent gains achieved by the nation’s reforms.
Amid the turmoil, a stark contrast emerged in the form of a N4.64 billion infrastructure bond listing by Elektron Finance SPV Plc. This new, high-yield bond, guaranteed against risk, became a safe-haven play for institutions navigating the equity storm.
Similarly, the week’s performance was compounded by a significant 8.3% drop in MTN Nigeria’s share value, as investors trimmed holdings ahead of its dividend qualification date, a move separate from, yet amplified by, the pervasive negative sentiment.
Market analysts were unanimous in pointing to Trump’s comments as the primary catalyst. Economist Dr. Muda Yusuf warned that the threat “risks undermining the country’s image as a stable investment destination,” which could lead to falling stock valuations and higher borrowing costs.
The pervasive fear is that the former President’s fiery rhetoric has raised the risk premium on all Nigerian assets, causing both domestic and international investors to reassess their exposure.
While some experts, like Adebayo Adeleke, believe the domestically-driven market is resilient enough to stage a quick recovery, the immediate outlook remains bleak, with analysts at AIICO Capital forecasting “sustained negative sentiment in the near term” as the market grapples with this sudden and severe political shock.
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